Petoskey exits Pointe agreement

April 21, 2009|By Ryan Bentley

Petoskey City Council members decided Monday to end the city's business arrangements with developers of the stalled Petoskey Pointe project.

The council voted 3-2 to terminate the agreement with Lake Street Petoskey Associates which provided for a city purchase of part of the proposed hotel/condominium complex's parking garage. City officials had agreed in 2004 to provide developers with part of the land they'd need for the project in exchange for a $970,000 credit toward the $6 million parking purchase.

Along with notifying involved parties of the termination, the council made plans to demand immediate payment of the $970,000 land value.

Mayor Ted Pall and council members James Dittmar and Ron Marshall voted to end the agreement, while members Bill Fraser and Bob Johnson opposed the termination.

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"It's been apparent that this developer has not produced anything he said (would be produced)," Marshall said.

Added Pall: "There's extremely little likelihood I see for success with the developers."

While this decision ends the city's project participation from a business standpoint, developers' land-use authorization to pursue the project remains in place. Terminating this would require a separate process.

The city's contract with Lake Street Petoskey Associates called for developers to have the project substantially finished by last fall, but they were unable to meet this deadline because of financing-related construction delays.

In December, the council's 2008 membership decided to push back the completion deadline to 2011, provided that developers meet some benchmarks along the way. The first few needed to be satisfied in February, such as having a bridge loan in place for the project. But developers didn't have this initial financing secured in time, and the council declared them to be in default of the agreement.

National City Bank, holder of a mortgage on the downtown site, was given 60 days as part of the agreement to correct developers' default. James Murray, an attorney with city legal counsel Plunkett & Cooney, noted that the bank's deadline to do so passed at 5 p.m. Monday.

"I'm not aware of any steps being taken by the bank to cure the default by the developers," he told the council.

Dittmar said he believes any future developer looking to pursue a project at the Petoskey Pointe site would be willing to negotiate with the city to provide some parking, and that a deal better than the one with Lake Street Petoskey Associates could be worked out.

Johnson took a view different from Dittmar's about what the agreement termination would mean for the city's downtown parking prospects.

"If the next person wants to build something completely different that has no parking, then there would be no opportunity," he said.

With legal developments that have happened with Petoskey Pointe in the past several days (such as a settlement of construction lien foreclosure litigation), Fraser said he would have preferred to "let the dust settle a little" before the council's decision on terminating the agreement. He added that he saw nothing to be gained by acting immediately, and nothing to lose by allowing some extra time to consider the situation.

Attempts today, Tuesday, to reach Petoskey Pointe development partners Jim Wilson and David Jankowski were unsuccessful. Prior to the meeting, Jankowski said developers were working on new financing arrangements and that he expected the project would proceed with or without city involvement.